Employer Health Tax Impacts

Last May, UBCM released a report concerning the impacts of the Employer Health Tax (EHT) on local governments. In light of the significant turnover among the membership following the 2018 local government general election, UBCM’s Executive is redistributing the report as local governments are preparing 2019 budgets.

The report shows a considerable variance in how the EHT affects communities. In general, local governments with smaller payrolls and populations will see a modest net benefit from the implementation of EHT. However, the majority (71%) of local governments will see cost increases as a result of EHT implementation. Most local governments with populations greater than 50,000 will see an average cost increase of $631,500 (or 92%) from 2017 to 2020 due to the EHT.

One of the key findings is that, taken as a whole, the EHT will nearly double respondents’ Medical Service Plan related costs between 2017 and 2020. 2019 is a particularly challenging year since the local governments and other employers will be paying the EHT while still paying Medical Service Plan premiums in accordance with local employment practices.

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